Monday, September 08, 2008

Industry Insider - August 2008

Piracy - the Underground (and Totally Illegal) Economy

by Eric Marlow

(Rant mode On)

Two months ago I wrote a Playground Insider article about the problems with piracy from the point of how it impacts the typical game developer. Recently I was reading an article by a local Pinoy gamer in the online magazine The Escapist. The article was entitled “Piracy and the Underground Economy”. The article was so misguided I felt compelled to respond.

In his article, the author states there is a local underground economy that supports the duplication and distribution of pirated games and without putting too much spin on it, he seems to imply this is ok and should be allowed.

Hopefully this isn’t perceived as coming from “just another foreigner who doesn’t understand how things work here”, but I’ve lived in Asia for over five years and I’ve been living in the Philippines for over 2 ½ years. I run a game studio, and I deal each day with the security of intellectual property. I think I’ve accumulated enough information and appreciation for how things work here. Without a doubt it is unfortunate that the economies of developing countries make it difficult to indulge in games as a hobby. And the author does correctly portray the relative high costs of games when compared to similar discretionary spending in the US or Europe.

What I believe though that is misguided is that it is ok to support such activities just because the cost of owning legitimate game products is out of reach for most citizens. On many occasions I have used this simple analogy: I know I am fortunate and I do make a good living. But I cannot easy afford a BMW or Mercedes Benz. Does this mean it is ok for me to go and take one off the lot? Is it ok to have groups of people out there who actively support the sale of illegal autos, just because most people can’t buy one? Just because a product exists, is it ok for me to take one even though I can’t afford it? Of course it isn’t. But yet there seems to be the sentiment that it’s ok to pirate games, software, and music just because they are too expensive.

Why is there this difference? Maybe because pirating is easier than stealing a shiny new BMW off the lot? Maybe there is less risk of the law catching up to them for pirating games? And maybe it is because “everyone is doing it” gives people the sense that the social stigma associated with piracy doesn’t apply to them?

The author of the article also lays claim that eradicating piracy in the Philippines will hurt local economies, those businesses supporting it, and the people who are employed. He also notes the loss of tax revenue that would occur if the laws were enforced. Now, I haven’t examined the accounts of these local vendors, but it’s a safe bet they aren’t fully reporting the revenue to the BIR. That would be more easily understood if they gave you an official receipt with each purchase, but most do not supply an O.R., hence that tax revenue becomes as underground as the products they sell.

Where the businesses and employees of the piracy trade are concerned, I am sorry that I cannot feel more sympathy for them, as they are doing something that is just not right and damaging to my chosen profession. Times are tough for sure, but I’d rather see them finding ways of supporting the legitimate sale of games rather than supporting an economy that derives its very essence from the income generated from sales to such customers. A sale to a customer willing to buy illegal products does nothing for the industry, and maybe the author of the article wouldn’t be the starving artist that he says he is if more people paid for his products.

Do I have any answers? Unfortunately no. The obvious approaches such as regional encoding, copy protection and the like do not work very well. Possibly games, software, and music that must be verified online is the only way to go, as it works fairly well for games like World of Warcraft and other MMOs. But there are always new countermeasures in place to circumvent the protections. The only true weapon we have to fight with right now is education and giving people a better understanding of how their actions affect the very industry they are taking from. Maybe then the stigma will be placed back on those who improperly take from the industry. Lacking solutions to the problem does not justify such a position.

(Rant Mode Off)

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